ISLAMABAD: Pakistan Business Council (PBC) has opposed increase in tariffs on essential items, maintaining that it will further accelerate inflation.
The PBC, in its analysis dated July-Sept 21 on import figures released by the Pakistan Bureau of Statistics (PBS) argued that imports rose by $ 7.5 billion or 66 percent over the previous year which is alarming.
Two-thirds of the $ 7.5 billion increase i.e. $ 5 billion is on account of global commodity cost inflation which is outside Pakistan’s direct control and includes more expensive medicines necessitated by the pandemic.
The remainder of $ 2.5 billion increase is accounted for by higher import of machinery, transport goods and textile inputs. Much of the machinery is funded by TERF and will lead to exports, whilst textiles include cotton and synthetic yarn necessary for exports. The largest components of the increase in imports within the Transportation Group are buses, trucks, ships, boats and cars in CKD/SKD form. Increase in import of cars in CBU form amounted to $ 56 million only, the PBC pointed out.
The PBC said that it is continuously advising against knee-jerk and sweeping measures such as higher tariffs and requirement of 100 percent cash margins for LCs for import of industrial inputs. Regretfully, some items of industrial input have been included in the list and the PBC has requested SBP to remove them from 100 percent cash margin requirement.
The Council further observed that right pricing of imported energy, a start on which was made last week, will help curb consumption. Higher tariffs on imports of essential items however, will further accelerate inflation and are not recommended. Fundamental reforms should promote indigenous and renewable energy and agricultural productivity to make the country more self-reliant. It should also broaden the basket and diversify the reach of exports to put some of the opportunistic shift of orders away from pandemic affected countries to Pakistan on a sustainable footing. This is part of the PBC’s Make-in-Pakistan thrust.
It further maintained that global demand escalation and supply chain disruptions caused by container shortages appear to be responsible for escalation in costs
According to PBC, some of the increase in imports is due to domestic shortages of food and agricultural commodities. Imports of these are unavoidable for reasons of food security, controlling domestic inflation and securing inputs for textile exports. Reviving agricultural output is the sustainable solution
The Monthly Quantum Index of Manufacturing is beginning to show signs of revival, the PBC added.
Copyright Business Recorder, 2021
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